An increasing number of single-family built-for-rent homes are being constructed in the U.S.

• In the first quarter of 2024, construction started on approximately 18,000 single-family rental homes, which represents a 20% increase compared to the same period in 2023, as reported by the National Association of Home Builders.
• Real estate experts claim that the rise in single-family rentals is a partial solution to the housing affordability crisis.
• If you can't afford to buy but need to consider what to do, here are some options.

The construction of more built-for-rent single-family homes in the U.S. is increasing, as stated by the National Association of Home Builders, and experts attribute this to the housing affordability crisis.

As mortgage rates rise and home buying becomes more difficult, renting becomes a more viable option, according to Robert Dietz, chief economist at the NAHB.

In the first quarter of 2024, construction began on approximately 18,000 single-family, built-for-rent homes, which represents a 20% increase compared to the same period in 2023, as per NAHB's analysis of data from the U.S. Census Bureau's Quarterly Starts and Completions by Purpose and Design.

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According to Molly Boesel, principal economist at CoreLogic, individuals must select a place to reside.

If they can't find what they need in the for-sale market, they'll go to the rental market, she stated.

'We are seeing this growing move'

The percentage of single-family built-for-rent starts increased from 5% in 2021 to 10% in 2023, nearly doubling in two years, as per the National Association of Realtors, who analyzed data from the U.S. Census Bureau's Survey of Construction Data.

The number of single-family built-for-rent units increased to 90,000 units in 2023 from 81,000 units in 2022, according to the National Association of Realtors.

The trend of built-for-rent properties is increasing in the U.S., according to Jessica Lautz, deputy chief economist at the NAR.

Lautz stated that the increasing prevalence of built-for-rent single-family homes is a result of the high demand from individuals who cannot afford the current expensive and inaccessible housing market.

In April, the Mortgage Bankers Association's Purchase Applications Payment Index indicated a decline in homebuyer affordability.

Builders are observing an increase in renters aged 30 to 40, according to NAHB's Dietz.

Lautz stated that an increasing number of young adults are interested in renting homes as they cannot afford to buy one at present.

Lautz added that they have no alternative but to turn to rental properties.

"Either potential buyers can't find what they're looking for or it's too expensive due to the shortage of homes for sale, according to Boesel," said Boesel.

"Rentals remain popular due to high monthly mortgage payments, which are still close to 7%," she said.

If they prefer a single-family home, a detached one is the best option, she stated.

Rent or buy?

In May, the typical asking rent for a single-family home was $2,262, a 4.7% increase from the previous year, while the rent price for a multifamily building was $1,896, up 2.6% in the same time frame, according to Zillow.

In April, the national median mortgage payment requested by homebuyers was $2,256, an increase of $55 from March, and a rise of $144 from the previous year, representing a 6.8% hike.

The size of the down payment and the interest rate will determine the mortgage payment.

In addition to mortgage payments, homeowners are also responsible for covering "unforeseen expenses" such as maintenance, repairs, taxes, and insurance.

To make informed decisions, individuals must comprehend what a practical budget entails. Additionally, it is crucial to consider the length of time you intend to reside in the home and whether it will meet your needs in the near future, as advised by Lautz.

Determine your true expenses and obligations as a single-family home renter by asking the same questions you would if you were renting an apartment, Dietz advised.

Dietz stated that it is important to determine who is responsible for maintaining the property outside the home, such as yard work. He explained that this responsibility typically falls on the property owner, but it can vary.